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HIGHER EDUCATION ACT OF 1965
PART B — STRENGTHENING HISTORICALLY BLACK COLLEGES AND
UNIVERSITIES
SEC. 321. FINDINGS AND PURPOSES.
The Congress finds that—
(1) the historically Black colleges and universities have
contributed significantly to the effort to attain equal opportunity
through postsecondary education for Black, low-income,
and educationally disadvantaged Americans;
(2) States and the Federal Government have discriminated
in the allocation of land and financial resources to support
Black public institutions under the Morrill Act of 1862 and its
progeny, and against public and private Black colleges and universities
in the award of Federal grants and contracts, and the
distribution of Federal resources under this Act and other Federal
programs which benefit institutions of higher education;
(3) the current state of Black colleges and universities is
partly attributable to the discriminatory action of the States
and the Federal Government and this discriminatory action re-quires
the remedy of enhancement of Black postsecondary institutions
to ensure their continuation and participation in fulfilling
the Federal mission of equality of educational opportunity;
and
(4) financial assistance to establish or strengthen the physical
plants, financial management, academic resources, and
endowments of the historically Black colleges and universities are
appropriate methods to enhance these institutions and facilitate
a decrease in reliance on governmental financial support
and to encourage reliance on endowments and private sources.
SEC. 322. DEFINITIONS.
For the purpose of this part:
(1) The term ‘‘graduate’’ means an individual who has at-tended
an institution for at least three semesters and fulfilled
academic requirements for undergraduate studies in not more
than 5 consecutive school years.
(2) The term ‘‘part B institution’’ means any historically
Black college or university that was established prior to 1964,
whose principal mission was, and is, the education of Black
Americans, and that is accredited by a nationally recognized
accrediting agency or association determined by the Secretary
to be a reliable authority as to the quality of training offered
or is, according to such an agency or association, making reasonable
progress toward accreditation, except that any branch
campus of a southern institution of higher education that prior
to September 30, 1986, received a grant as an institution with
special needs under section 321 of this title and was formally
recognized by the National Center for Education Statistics as
a Historically Black College or University but was determined
not to be a part B institution on or after October 17, 1986,
shall, from the date of enactment of this exception, be considered
a part B institution.
January 6, 1999
SEC. 322. DEFINITIONS. (Continued)
(3) The term ‘‘Pell Grant recipient’’ means a recipient of financial
aid under subpart 1 of part A of title IV of this Act.
(4) The term ‘‘professional and academic areas in which
Blacks are underrepresented’’ shall be determined by the Secretary
and the Commissioner of the Bureau of Labor Statistics,
on the basis of the most recent available satisfactory data, as
professional and academic areas in which the percentage of
Black Americans who have been educated, trained, and employed
is less than the percentage of Blacks in the general population.
(5) The term ‘‘school year’’ means the period of 12 months
beginning July 1 of any calendar year and ending June 30 of
the following calendar year.
SEC. 323. GRANTS TO INSTITUTIONS.
(a) GENERAL AUTHORIZATION; USES OF FUNDS.— From amounts
available under section 360(a)(2) in any fiscal year the Secretary
shall make grants (under section 324) to institutions which have
applications approved by the Secretary (under section 325) for any
of the following uses:
(1) Purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes.
(2) Construction, maintenance, renovation, and improvement
in classroom, library, laboratory, and other instructional
facilities, including purchase or rental of telecommunications
technology equipment or services.
(3) Support of faculty exchanges, and faculty development
and faculty fellowships to assist in attaining advanced degrees
in their field of instruction.
(4) Academic instruction in disciplines in which Black
Americans are underrepresented.
(5) Purchase of library books, periodicals, microfilm, and
other educational materials, including telecommunications pro-gram
materials.
(6) Tutoring, counseling, and student service programs de-signed
to improve academic success.
(7) Funds and administrative management, and acquisition
of equipment for use in strengthening funds management.
(8) Joint use of facilities, such as laboratories and libraries.
(9) Establishing or improving a development office to
strengthen or improve contributions from alumni and the private
sector.
(10) Establishing or enhancing a program of teacher education
designed to qualify students to teach in a public elementary
or secondary school in the State that shall include, as part
of such program, preparation for teacher certification.
(11) Establishing community outreach programs which will
encourage elementary and secondary students to develop the
academic skills and the interest to pursue postsecondary education.
(12) Other activities proposed in the application submitted
pursuant to section 325 that—
(A) contribute to carrying out the purposes of this
part; and
(B) are approved by the Secretary as part of the re-view
and acceptance of such application.
SEC. 323. GRANTS TO INSTITUTIONS. (Continued)
(b) ENDOWMENT FUND.—
(1) IN GENERAL.—An institution may use not more than 20
percent of the grant funds provided under this part to establish
or increase an endowment fund at the institution.
(2) MATCHING REQUIREMENT.— In order to be eligible to use
grant funds in accordance with paragraph (1), the eligible institution
shall provide matching funds from non-Federal
sources, in an amount equal to or greater than the Federal
funds used in accordance with paragraph (1), for the establishment
or increase of the endowment fund.
(3) COMPARABILITY.—The provisions of part C regarding
the establishment or increase of an endowment fund, that the
Secretary determines are not inconsistent with this subsection,
shall apply to funds used under paragraph (1).
(c) LIMITATIONS.— (1) No grant may be made under this Act for
any educational program, activity, or service related to sectarian
instruction or religious worship, or provided by a school or department
of divinity. For the purpose of this subsection, the term
‘‘school or department of divinity’’ means an institution whose pro-gram
is specifically for the education of students to prepare them
to become ministers of religion or to enter upon some other religious
vocation, or to prepare them to teach theological subjects.
(2) Not more than 50 percent of the allotment of any institution
may be available for the purpose of constructing or maintaining
a classroom, library, laboratory, or other instructional facility.
SEC. 324. ALLOTMENTS TO INSTITUTIONS.
(a) ALLOTMENT; PELL GRANT BASIS.— From the amounts appropriated
to carry out this part for any fiscal year, the Secretary shall
allot to each part B institution a sum which bears the same ratio
to one-half that amount as the number of Pell Grant recipients in
attendance at such institution at the end of the school year preceding
the beginning of that fiscal year bears to the total number of
Pell Grant recipients at all part B institutions.
(b) ALLOTMENT; GRADUATES BASIS.— From the amounts appropriated
to carry out this part for any fiscal year, the Secretary shall
allot to each part B institution a sum which bears the same ratio
to one-fourth that amount as the number of graduates for such
school year at such institution bears to the total number of grad-uates
for such school year at all part B institutions.
(c) ALLOTMENT; GRADUATE AND PROFESSIONAL STUDENT
BASIS.— From the amounts appropriated to carry out this part for
any fiscal year, the Secretary shall allot to each part B institution
a sum which bears the same ratio to one-fourth of that amount as
the percentage of graduates per institution, who are admitted to
and in attendance at, within 5 years of graduation with a baccalaureate
degree, a graduate or professional school in a degree pro-gram
in disciplines in which Blacks are underrepresented, bears to
the percentage of such graduates per institution for all part B insti-tutions.
(d) MINIMUM ALLOTMENT.— (1) Notwithstanding subsections
(a), (b), and (c), the amount allotted to each part B institution
under this section shall not be less than $500,000.
(2) If the amount appropriated pursuant to section 360(a)(2)(A)
for any fiscal year is not sufficient to pay the minimum allotment
SEC. 324. ALLOTMENTS TO INSTITUTIONS. (Continued)
required by paragraph (1) of this subsection to all part B institutions,
the amount of such minimum allotments shall be ratably reduced.
If additional sums become available for such fiscal year,
such reduced allocation shall be increased on the same basis as
they were reduced (until the amount allotted equals the minimum
allotment required by paragraph (1)).
(e) REALLOTMENT.— The amount of any part B institution’s allotment
under subsection (a), (b), (c), or (d) for any fiscal year
which the Secretary determines will not be required for such institution
for the period such allotment is available shall be available
for reallotment from time to time on such date during such period
as the Secretary may determine to other part B institutions in pro-portion
to the original allotment to such other institutions under
this section for such fiscal year.
(f) SPECIAL MERGER RULE.— (1) The Secretary shall permit any
eligible institution for a grant under part B in any fiscal year prior
to the fiscal year 1986 to apply for a grant under this part if the
eligible institution has merged with another institution of higher
education which is not so eligible or has merged with an eligible
institution.
(2) The Secretary may establish such regulations as may be
necessary to carry out the requirement of paragraph (1) of this sub-section.
(g) SPECIAL RULE FOR CERTAIN DISTRICT OF COLUMBIA ELIGIBLE
INSTITUTIONS.— In any fiscal year that the Secretary deter-mines
that Howard University or the University of the District of
Columbia will receive an allotment under subsections (b) and (c) of
this section which is not in excess of amounts received by Howard
University under the Act of March 2, 1867 (14 Stat. 438; 20 U.S.C.
123), relating to annual authorization of appropriations for Howard
University, or by the University of the District of Columbia under
the District of Columbia Self-Government and Governmental Reorganization
Act (87 Stat. 774) for such fiscal year, then Howard University
and the University of the District of Columbia, as the case
may be, shall be ineligible to receive an allotment under this sec-tion.
SEC. 325. APPLICATIONS.
(a) CONTENTS.— No part B institution shall be entitled to its allotment
of Federal funds for any grant under section 324 for any
period unless that institution meets the requirements of subparagraphs
(C), (D), and (E) of section 312(b)(1) and submits an application
to the Secretary at such time, in such manner, and containing
or accompanied by such information, as the Secretary may reason-ably
require. Each such application shall—
(1) provide that the payments under this Act will be used
for the purposes set forth in section 323; and
(2) provide for making an annual report to the Secretary
and provide for—
(A) conducting, except as provided in subparagraph
(B), a financial and compliance audit of an eligible institution,
with regard to any funds obtained by it under this
title at least once every 2 years and covering the period
since the most recent audit, conducted by a qualified, independent
organization or person in accordance with standards
established by the Comptroller General for the audit
SEC. 325. APPLICATIONS (Continued)
of governmental organizations, programs, and functions,
and as prescribed in regulations of the Secretary, the results
of which shall be submitted to the Secretary; or
(B) with regard to an eligible institution which is audited
under chapter 75 of title 31, United States Code,
deeming such audit to satisfy the requirements of subparagraph
(A) for the period covered by such audit.
(b) APPROVAL.— The Secretary shall approve any application
which meets the requirements of subsection (a) and shall not disapprove
any application submitted under this part, or any modification
thereof, without first affording such institution reasonable
notice and opportunity for a hearing.
(c) GOALS FOR FINANCIAL MANAGEMENT AND ACADEMIC PROGRAMS.—
Any application for a grant under this part shall describe
measurable goals for the institution’s financial management and
academic programs and include a plan of how the applicant intends
to achieve those goals.
SEC. 326. PROFESSIONAL OR GRADUATE INSTITUTIONS.
(a) GENERAL AUTHORIZATION.— (1) Subject to the availability of
funds appropriated to carry out this section, the Secretary shall
award program grants to each of the postgraduate institutions listed
in subsection (e) that is determined by the Secretary to be making
a substantial contribution to the legal, medical, dental, veterinary,
or other graduate education opportunities in mathematics,
engineering, or the physical or natural sciences for Black Americans.
(2) No grant in excess of $1,000,000 may be made under this
section unless the postgraduate institution provides assurances
that 50 percent of the cost of the purposes for which the grant is
made will be paid from non-Federal sources, except that no institution
shall be required to match any portion of the first $1,000,000
of the institution’s award from the Secretary. After funds are made
available to each eligible institution under the funding rules de-scribed
in subsection (f ), the Secretary shall distribute, on a pro
rata basis, any amounts which were not so made available (by reason
of the failure of an institution to comply with the matching requirements
of this paragraph) among the institutions that have
complied with such matching requirement.
(b) DURATION.— Grants shall be made for a period not to exceed 5 years.
(c) USES OF FUNDS.— A grant under this section may be used
for—
(1) purchase, rental or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes;
(2) construction, maintenance, renovation, and improvement
in classroom, library, laboratory, and other instructional
facilities, including purchase or rental of telecommunications
technology equipment or services;
(3) purchase of library books, periodicals, technical and
other scientific journals, microfilm, microfiche, and other educational
materials, including telecommunications program materials;
(4) scholarships, fellowships, and other financial assistance
for needy graduate and professional students to permit the enrollment
of the students in and completion of the doctoral degree
SEC. 326. PROFESSIONAL OR GRADUATE INSTITUTIONS. (Continued)
in medicine, dentistry, pharmacy, veterinary medicine,
law, and the doctorate degree in the physical or natural
sciences, engineering, mathematics, or other scientific disciplines
in which African Americans are underrepresented;
(5) establish or improve a development office to strengthen
and increase contributions from alumni and the private sector;
(6) assist in the establishment or maintenance of an institutional
endowment to facilitate financial independence pursuant
to section 331; and
(7) funds and administrative management, and the acquisition
of equipment, including software, for use in strengthening
funds management and management information systems.
(d) APPLICATION.— Any institution eligible for a grant under
this section shall submit an application which—
(1) demonstrates how the grant funds will be used to im-prove
graduate educational opportunities for Black and low-in-come
students, and lead to greater financial independence; and
(2) provides, in the case of applications for grants in excess
of $1,000,000, the assurances required by subsection (a)(2) and
specifies the manner in which the eligible institution is going
to pay the non-Federal share of the cost of the application.
(e) ELIGIBILITY.—
(1) IN GENERAL.— Independent professional or graduate institutions
and programs eligible for grants under subsection (a)
are the following 1
(A) Morehouse School of Medicine;
(B) Meharry Medical School;
(C) Charles R. Drew Postgraduate Medical School;
(D) Clark-Atlanta University;
(E) Tuskegee University School of Veterinary Medicine
and other qualified graduate programs;
(F) Xavier University School of Pharmacy and other
qualified graduate programs;
(G) Southern University School of Law and other
qualified graduate programs;
(H) Texas Southern University School of Law and
School of Pharmacy and other qualified graduate pro-grams;
(I) Florida A&M University School of Pharmaceutical
Sciences and other qualified graduate programs;
(J) North Carolina Central University School of Law
and other qualified graduate programs;
(K) Morgan State University qualified graduate pro-gram;
(L) Hampton University qualified graduate program;
(M) Alabama A&M qualified graduate program;
(N) North Carolina A&T State University qualified
graduate program;
(O) University of Maryland Eastern Shore qualified
graduate program;
(P) Jackson State University qualified graduate pro-gram;
(Q) Norfolk State University qualified graduate pro-grams;
and
(R) Tennessee State University qualified graduate pro-grams.
326 HIGHER EDUCATION ACT OF 1965 (Continued)
(2) QUALIFIED GRADUATE PROGRAM.—
A) For the purposes of this section, the term ‘‘qualified graduate
program’’ means a graduate or professional program that provides
a program of instruction in the physical or natural sciences,
engineering, mathematics, or other scientific discipline in which
African Americans are underrepresented and has students enrolled in
such program at the time of application for a grant under this
section.
(B) Notwithstanding the enrollment requirement contained
in subparagraph (A), an institution may use an amount equal
to not more than 10 percent of the institution’s grant under
this section for the development of a new qualified graduate
program.
(3) SPECIAL RULE.— Institutions that were awarded grants
under this section prior to October 1, 1998, shall continue to
receive such grants, subject to the availability of appropriated
funds, regardless of the eligibility of the institutions described
in subparagraphs (Q) and (R) of paragraph (1).
(4) ONE GRANT PER INSTITUTION.— The Secretary shall not
award more than 1 grant under this section in any fiscal year
to any institution of higher education or university system.
(5) INSTITUTIONAL CHOICE.— The president or chancellor of
the institution may decide which graduate or professional
school or qualified graduate program will receive funds under
the grant in any 1 fiscal year, if the allocation of funds among
the schools or programs is delineated in the application for
funds submitted to the Secretary under this section.
(f) FUNDING RULE.— Subject to subsection (g), of the amount
appropriated to carry out this section for any fiscal year—
(1) the first $26,600,000 (or any lesser amount appropriated)
shall be available only for the purposes of making
grants to institutions or programs described in subparagraphs
(A) through (P) of subsection (e)(1);
(2) any amount in excess of $26,600,000, but not in excess
of $28,600,000, shall be available for the purpose of making
grants to institutions or programs described in subparagraphs
(Q) and (R) of subsection (e)(1); and
(3) any amount in excess of $28,600,000, shall be made
available to each of the institutions or programs identified in
subparagraphs (A) through (R) pursuant to a formula developed
by the Secretary that uses the following elements:
(A) The ability of the institution to match Federal
funds with non-Federal funds.
(B) The number of students enrolled in the programs
for which the eligible institution received funding under
this section in the previous year.
(C) The average cost of education per student, for all
full-time graduate or professional students (or the equivalent)
enrolled in the eligible professional or graduate
school, or for doctoral students enrolled in the qualified
graduate programs.
(D) The number of students in the previous year who
received their first professional or doctoral degree from the
programs for which the eligible institution received funding
326 HIGHER EDUCATION ACT OF 1965 (Continued)
under this section in the previous year.
(E) The contribution, on a percent basis, of the pro-grams
for which the institution is eligible to receive funds
under this section to the total number of African Americans
receiving graduate or professional degrees in the professions
or disciplines related to the programs for the previous
year.
(g) HOLD HARMLESS RULE.— Notwithstanding paragraphs (2)
and (3) of subsection (f ), no institution or qualified program identified
in subsection (e)(1) that received a grant for fiscal year 1998
and that is eligible to receive a grant in a subsequent fiscal year
shall receive a grant amount in any such subsequent fiscal year
that is less than the grant amount received for fiscal year 1998, un-less
the amount appropriated is not sufficient to provide such grant
amounts to all such institutions and programs, or the institution
cannot provide sufficient matching funds to meet the requirements
of this section.
SEC. 327. REPORTING AND AUDIT REQUIREMENTS.
(a) RECORDKEEPING.— Each recipient of a grant under this part
shall keep such records as the Secretary shall prescribe, including
records which fully disclose—
(1) the amount and disposition by such recipient of the
proceeds of such assistance;
(2) the cost of the project or undertaking in connection
with which such assistance is given or used;
(3) the amount of that portion of the cost of the project or
undertaking supplied by other sources; and
(4) such other records as will facilitate an effective audit.
(b) REPAYMENT OF UNEXPENDED FUNDS.— Any funds paid to an
institution and not expended or used for the purposes for which the
funds were paid within 10 years following the date of the initial
grant awarded to an institution under part B of this title shall be
repaid to the Treasury of the United States.
PART C— ENDOWMENT CHALLENGE GRANTS FOR INSTITUTIONS
ELIGIBLE FOR ASSISTANCE UNDER PART A OR PART B
SEC. 331. ENDOWMENT CHALLENGE GRANTS.
(a) PURPOSE; DEFINITIONS.—(1) The purpose of this section is
to establish a program to provide matching grants to eligible institutions
in order to establish or increase endowment funds at such
institutions, to provide additional incentives to promote fund raising
activities by such institutions, and to foster increased independence
and self-sufficiency at such institutions.
(2) For the purpose of this section:
(A) The term ‘‘endowment fund’’ means a fund established
by State law, by an institution of higher education, or by a
foundation which is exempt from taxation and is maintained
for the purpose of generating income for the support of the institution,
but which shall not include real estate.
(B) The term ‘‘endowment fund corpus’’ means an amount
equal to the grant or grants awarded under this section plus
an amount equal to such grant or grants provided by the institution.
SEC. 331. ENDOWMENT CHALLENGE GRANTS. (Continued)
(C) The term ‘‘endowment fund income’’ means an amount
equal to the total value of the endowment fund established
under this section minus the endowment fund corpus.
(D)(i) The term ‘‘eligible institution’’ means an institution
that is an—
(I) eligible institution under part A or would be considered
to be such an institution if section 312(b)(1)(C) referred
to a postgraduate degree rather than a bachelor’s
degree;
(II) institution eligible for assistance under part B or
would be considered to be such an institution if section 324
referred to a postgraduate degree rather than a baccalaureate
degree; or
(III) institution of higher education that makes a substantial
contribution to postgraduate medical educational
opportunities for minorities and the economically disadvantaged.
(ii) The Secretary may waive the requirements of sub-clauses
(I) and (II) of clause (i) with respect to a postgraduate
degree in the case of any institution otherwise eligible under
clause (i) for an endowment challenge grant upon determining
that the institution makes a substantial contribution to medical
education opportunities for minorities and the economically
disadvantaged.
(b) GRANTS AUTHORIZED.— (1) From sums available for this section
under section 399, the Secretary is authorized to award endowment
challenge grants to eligible institutions to establish or in-crease
an endowment fund at such institution. Such grants shall
be made only to eligible institutions described in paragraph (4)
whose applications have been approved pursuant to subsection (g).
(2)(A) Except as provided in subparagraph (B), no institution
shall receive a grant under this section, unless such institution has
deposited in its endowment fund established under this section an
amount equal to the amount of such grant. The source of funds for
this institutional match shall not include Federal funds or funds
from an existing endowment fund.
(B) The Secretary may make a grant under this part to an eligible
institution in any fiscal year if the institution—
(i) applies for a grant in an amount not exceeding $500,000; and
(ii) has deposited in the eligible institution’s endowment
fund established under this section an amount which is equal
to ¤2 of the amount of such grant.
(C) An eligible institution of higher education that is awarded
a grant under subparagraph (B) shall not be eligible to receive an
additional grant under subparagraph (B) until 10 years after the
date on which the grant period terminates.
(3) The period of a grant under this section shall be not more
than 10 years. During the grant period, an institution may not
withdraw or expend any of the endowment fund corpus. After the
termination of the grant period, an institution may use the endowment
fund corpus plus any endowment fund income for any educational
purpose.
(4)(A) An institution of higher education is eligible to receive
a grant under this section if it is an eligible institution as described
in subsection (a)(2)(D) of this section.
SEC. 331. ENDOWMENT CHALLENGE GRANTS. (Continued)
(B) No institution shall be ineligible for an endowment challenge
grant under this section for a fiscal year by reason of the previous
receipt of such a grant but no institution shall be eligible to
receive such a grant for more than 2 fiscal years out of any period
of 5 consecutive fiscal years.
(5) An endowment challenge grant awarded under this section
to an eligible institution shall be in an amount which is not less
than $50,000 in any fiscal year.
(6)(A) An eligible institution may designate a foundation,
which was established for the purpose of raising money for the institution,
as the recipient of the grant awarded under this section.
(B) The Secretary shall not award a grant to a foundation on
behalf of an institution unless—
(i) the institution assures the Secretary that the foundation
is legally authorized to receive the endowment fund corpus
and is legally authorized to administer the fund in accordance
with this section and any implementing regulation;
(ii) the foundation agrees to administer the fund in accordance
with the requirements of this section and any implementing
regulation; and
(iii) the institution agrees to be liable for any violation by
the foundation of the provisions of this section and any implementing
regulation, including any monetary liability that may
arise as a result of such violation.
(c) GRANT AGREEMENT; ENDOWMENT FUND PROVISIONS.—
(1) An institution awarded a grant under this section shall enter into
an agreement with the Secretary containing satisfactory assurances
that it will (A) immediately comply with the matching requirements
of subsection (b)(2), (B) establish an endowment fund
independent of any other such fund of the institution, (C) invest
the endowment fund corpus, and (D) meet the other requirements
of this section.
(2)(A) An institution shall invest the endowment fund corpus
and endowment fund income in low-risk securities in which a regulated
insurance company may invest under the law of the State in
which the institution is located such as a federally insured bank
savings account or comparable interest-bearing account, certificate
of deposit, money market fund, mutual fund, or obligations of the
United States.
(B) The institution, in investing the endowment fund established
under this section, shall exercise the judgment and care,
under the circumstances then prevailing, which a person of prudence,
discretion, and intelligence would exercise in the management
of such person’s own affairs.
(3)(A) An institution may withdraw and expend the endowment
fund income to defray any expenses necessary to the operation
of such college, including expenses of operations and maintenance,
administration, academic and support personnel, construction
and renovation, community and student services programs,
and technical assistance.
(B)(i) Except as provided in clause (ii), an institution may not
spend more than 50 percent of the total aggregate endowment fund
income earned prior to the time of expenditure.
(ii) The Secretary may permit an institution to spend more
Sec. 331 HIGHER EDUCATION ACT OF 1965 (Continued)
than 50 percent of the endowment fund income notwithstanding
clause (i) if the institution demonstrates such an expenditure is
necessary because of (I) a financial emergency, such as a pending
insolvency or temporary liquidity problem; (II) a life-threatening
situation occasioned by a natural disaster or arson; or (III) any
other unusual occurrence or exigent circumstance.
(d) REPAYMENT PROVISIONS.— (1) If at any time an institution
withdraws part of the endowment fund corpus, the institution shall
repay to the Secretary an amount equal to 50 percent of the with-drawn
amount, which represents the Federal share, plus income
earned thereon. The Secretary may use such repaid funds to make
additional challenge grants, or to increase existing endowment
grants, to other eligible institutions.
(2) If an institution expends more of the endowment fund in-come
than is permitted under subsection (c), the institution shall
repay the Secretary an amount equal to 50 percent of the amount
improperly expended (representing the Federal share thereof). The
Secretary may use such repaid fund to make additional challenge
grants, or to increase existing challenge grants, to other eligible institutions.
(e) AUDIT INFORMATION.— An institution receiving a grant
under this section shall provide to the Secretary (or a designee
thereof) such information (or access thereto) as may be necessary
to audit or examine expenditures made from the endowment fund
corpus or income in order to determine compliance with this section.
(f) SELECTION CRITERIA.— In selecting eligible institutions for
grants under this section for any fiscal year, the Secretary shall—
(1) give priority to an applicant that is receiving assistance
under part A or part B or has received a grant under part A
or part B of this title within the 5 fiscal years preceding the
fiscal year in which the applicant is applying for a grant under
this section;
(2) give priority to an applicant with a greater need for
such a grant, based on the current market value of the appli-cant’s
existing endowment in relation to the number of full-time
equivalent students enrolled at such institution; and
(3) consider—
(A) the effort made by the applicant to build or main-tain
its existing endowment fund; and
(B) the degree to which an applicant proposes to
match the grant with nongovernmental funds.
(g) APPLICATION.— Any institution which is eligible for assistance
under this section may submit to the Secretary a grant application
at such time, in such form, and containing such information
as the Secretary may prescribe, including a description of the long-and
short-term plans for raising and using the funds under this
part. Subject to the availability of appropriations to carry out this
section and consistent with the requirement of subsection (f), the
Secretary may approve an application for a grant if an institution,
in its application, provides adequate assurances that it will comply
with the requirements of this section.
(h) TERMINATION AND RECOVERY PROVISIONS.— (1) After notice
and an opportunity for a hearing, the Secretary may terminate and
recover a grant awarded under this section if the grantee institution—
(January 6, 1998)
Sec. 331 HIGHER EDUCATION ACT OF 1965 (Continued)
(A) expends portions of the endowment fund corpus or expends
more than the permissible amount of the endowment
funds income as prescribed in subsection (c)(3);
(B) fails to invest the endowment fund in accordance with
the investment standards set forth in subsection (c)(2); or
(C) fails to properly account to the Secretary concerning
the investment and expenditures of the endowment funds.
(2) If the Secretary terminates a grant under paragraph (1),
the grantee shall return to the Secretary an amount equal to the
sum of each original grant under this section plus income earned
thereon. The Secretary may use such repaid funds to make additional
endowment grants, or to increase existing challenge grants,
to other eligible institutions under this part.
PART D—HISTORICALLY BLACK COLLEGE AND
UNIVERSITY CAPITAL FINANCING
SEC. 341. FINDINGS.
The Congress finds that—
(1) a significant part of the Federal mission in education
has been to attain equal opportunity in higher education for
low-income, educationally disadvantaged Americans and African
Americans;
(2) the Nation’s historically Black colleges and universities
have played a prominent role in American history and have an
unparalleled record of fostering the development of African
American youth by recognizing their potential, enhancing their
academic and technical skills, and honing their social and political
skills through higher education;
(3) the academic and residential facilities on the campuses
of all historically Black colleges and universities have suffered
from neglect, deferred maintenance and are in need of capital
improvements in order to provide appropriate settings for
learning and social development through higher education;
(4) due to their small enrollments, limited endowments
and other financial factors normally considered by lenders in
construction financing, historically Black colleges and universities
often lack access to the sources of funding necessary to
undertake the necessary capital improvements through borrowing
and bond financing;
(5) despite their track record of long-standing and remark-able
institutional longevity and viability, historically Black colleges
and universities often lack the financial resources necessary
to gain access to traditional sources of capital financing
such as bank loans and bond financing; and
(6) Federal assistance to facilitate low-cost capital basis for
historically Black colleges and universities will enable such colleges
and universities to continue and expand their educational
mission and enhance their significant role in American higher
education.
January 6, 1999
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